JOSEPH GIGLIO: Every American enterprise requires a strategy

Joseph Giglio

Saturday

Dec 28, 2013 at 12:01 AMDec 28, 2013 at 11:21 AM

Strategy is a million-dollar iridescent word with multiple meanings that can lead to all kinds of confusion.

Strategy is a million-dollar iridescent word with multiple meanings that can lead to all kinds of confusion. There seems to be at least lip-service agreement that there is a superior strategy behind every successful enterprise, so it’s something we have to take seriously.

What about public sector enterprises? Our nation’s transportation network is a classic example of what happens in the absence of an effective strategy. In view of our decades-long unwillingness to adequately maintain or invest in it, we have the surface transportation network we deserve. But there is a nagging sense that America doesn’t have the transportation network needed to support a decent level of economic growth.

Is strategy some MBA-type’s interpretation of Excel spreadsheets that claim to define an enterprise’s future? Is it the ad hoc play-calling of a CEO whose gut instincts -- or maybe just pure luck -- have made him or her a Wall Street favorite? Is it something we fall back on when all else fails?

Those who read books on “business strategy” often come away with the uneasy sense that each author has defined the term in self-serving ways to support whatever management shtick he or she happens to be promoting. In this context, strategy may seem like nothing more than an impressive label pasted on an author’s pet idea to boost book sales.

Fortunately, strategy is far more than a buzzword. It has an impressive intellectual pedigree that’s many centuries old.

Originally, it was developed by the military to answer the question: “How do we use armies to further our nation’s interests?” But as civilization matured and other large enterprises came to play important roles, strategy moved beyond the military arena.

The Roman Catholic Church, the East India Company (during the early period of European colonization of the third world), the railroads and other industrial corporations spawned by the industrial revolution all adopted a strategy in one form or another to help themselves grow and gain power. In the process, it became apparent that an effective strategy had to embody an ongoing mechanism for adapting to rapidly changing environments.

In some cases, awareness of strategic potential has even given birth to large enterprises that didn’t previously exist. This happened during the 1930s when a rag-tag collection of feuding criminal gangs in major American cities were shaped into a smoothly functioning cartel that became known popularly, if inaccurately, as “the Mafia.”

This cartel was largely the inspiration of Manhattan gambler Arnold Rothstein and Chicago gang leader Johnny Torrio. Both were visionary strategic thinkers who lamented enormous potential profits from bootlegging and other activities they saw being left on the table because of pointless blood feuds. In the best tradition of practical capitalism, they realized that cooperation would yield higher profits than competition.

Under the aggressive leadership of protégés like Lucky Luciano, Meyer Lansky, Frank Costello, and Longy Zwillman, the traditional gangs were hammered into cooperative enterprises. They proceeded to parcel out business territories, create a national board of directors and enforcement arms like Murder Incorporated. They bought comprehensive protection from local politicians and police departments, expanded their activities into a wider variety of illegal and quasi-legal activities, and became hugely profitable.

When it comes to transportation, we have yet to address the strategic questions Arnold Rothstein and Johnny Torrio instinctively understood. What should the nation’s transportation system look like in the future? What options do we have for transforming the existing system to match this vision? What resources are available to carry out these options?

We need to address these questions before getting caught up in tactical questions like what should we start doing? What should we stop doing? What should we keep doing? All are all reasonable questions, but they’re meaningless unless we know what we are trying to accomplish.

We must deal with the strategic issue before addressing tactical questions. That means framing tactical questions in the context of a truly effective vision for American transportation by answering strategic questions that have gone unanswered far too long. Put simply, we have to stop trying to put the cart before the horse.

Joseph M. Giglio is a profes sor of strategic management at Northeastern University’s D’Amore-McKim School of Business.

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